CF has bullish technicals but faces resistance at ~140; breaking above could trigger further upside.

You've got CF Industries here, a fertilizer uh producer company, which of course is affected by what's happening in the Middle East. So, how are you looking at CF Industries?

Yeah. So, I think this is an interesting stock to pay attention to. They're the world world's largest producer of nitrogen fertilizer products. When I was digging into the numbers, this is what I found interesting about CF Industries.

So their Q2 sales were 2.2 billion versus 1.89 billion. So they were up 17% uh from last year. But what's interesting is their sales volume fell about 15%. So what that tells you is even though they sold less fertilizer or less product revenue was still up because the cost was able to go up because of the disruption due to the straight of her.

So people still need fertilizer. Farmers still need to grow their crops but CF was able to charge a little bit more. Uh, so they were able to make up, not just make up, but I mean they that the revenue just kind of boosted up from 1.9 billion to 2.2 billion, which is huge. That's a lot of money.

But here's the thing that's interesting about it. You think, okay, if the straight of Hermos opens up, oil goes back down, and fertilizer isn't disrupted, would that technically be bad news for the company?

And I don't think so. I think if they have to lower prices or if they keep prices the same, which seems to be the trend here after CO, I think that the volume would pick back up and either offset the fact that they might have to lower prices or if they can keep prices the same and volume picks back up because people are consuming more and farmers need more fertilizer, I think that means more upside from a revenue standpoint and from a sales volume standpoint from this company potentially.

And then technically speaking, I'm looking at an inverse head and shoulders on this stock. A little bit of a cup and handle. So I got two potentially bullish signals. The only problem is the stock is kind of trapped at his all-time high around 140.

I know Rick's going to take a look at the chart. So I want to see if the stock can break above the 140 resistance level. If it can, we possibly can get another leg and a run higher on this stock.

Yeah. And a very uh interesting chart here. We saw a lot more volatility near the beginning of the conflict with the war in Iran, but since midsummer, we've seen some pretty strong momentum to the upside here, but as Jason highlighted, we are less than $4 off of those all-time highs.

So, Rick, what are you seeing in the technical setup here?

Yes, and petroleum products are a major input in manufacturing of fertilizer as well, not just that it's an important uh uh trans transport area too, like they use the actual physical natural gas and other products.

Anyway, 14196 was the high point date we saw here. That's about where we topped out uh just uh recently here today's session as well. We can see that we also had a downward sloping uh trajectory here off of those highs connecting here that has been broken.

Now in this case shortly after earnings we bottomed out here near about 110. From there we form this channel type shape here uh trending upward with our two uh boundary lines here. the the bottom line going along the lows, duplicate it, put it across the highs.

In this case, it matches up decently well. Today's candle activity is kind of interesting because we have what looks like a bearish engulfing candle shaping up today. So, we have a large red candle completely swallowing up the real body, the distance between the opening and the closing of yesterday's smaller green candle here.

So if we do get further downside follow through tomorrow that would be confirmatory for our uh bearish engulfing candle that could lead to a breakout to the downside below our channel.

So we can also see other horizontal levels to watch out for. Old highs here and here and here. Uh that could be then a supportive area near 130. Old highs can frequently become supportive uh if we do get a downturn. 122 another relative low.

And finally around 110 our our post earnings low that we established here at the beginning of our channel. Next we can see our moving averages. We have our 5-day EMA in dark blue our exponential moving average representing one week near about 136.

Beyond that if we were to break through our channel we can see our 21day is around 130 or so. A little bit below that level. RSI above the 50 midline below the overbought threshold of 70.

Green trend line pointing upward still. So the bulls would want to see a further higher close as well as the RSI making a matching new uh high close. So volume profile in this case most of our recent trading activity comes in here 120 to 128 or so.

So that could be the supportive area again if we do start to uh drift lower.

All right Jason let's talk about how you trade this one for example purposes. What are you looking at specifically here? Yeah so you know the trend is your friend. stock is moving higher.

If the cup and handle, if the inverse head and shoulders holds to be true, this stock could be going higher. However, it's a little bit, if I'm going to take a trade or a risk at resistance or potential resistance, I want somebody else to take on a little bit of that risk with me.

So, I'm bullish the stock. I'm looking at the January 15, 2027 expiration. What I would do is I would buy the 130 strike price call. At the time, it was going for about $20. And then I would sell the 150 strike price call, which at the time was going for about $11.

So that brings down your risk from $20. Uh it reduces by 11. So you're only risking $9. If the stock is at or above 150, you're pretty much looking at about a 50% return uh on on your investment here.

And you're talking about 127 days in time frame, which is not bad. But I love having that buffer. I love having somebody else in the trade with me. If I have to wait it out, that time portion is passed off to them.

And then obviously if we get a little bit of a pullback, I reduce my risk from $20 down to $9 by doing that spread. So that's how I would play this. I would also keep my wrong level for a break below the 20-day moving average.

Right now, it's been pulling back and bouncing in the medium to short term off that 20-day moving average. If it breaks that, we might just want to cut this thing short and take a small loss.